Question 1
Christchurch Packaging Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
| Machine-hours required to support estimated production | 154,000 |
| Fixed manufacturing overhead cost | $659,000 |
| Variable manufacturing overhead cost per machine-hour | $4.50 |
Required (show your calculations):
a. Compute the predetermined overhead rate.
b. During the year, Job 546 was started and completed. The following information was available with respect to this job:
| Direct materials requisitioned | $370 |
| Direct labour cost | $250 |
| Machine-hours used | 34 |
Compute the total manufacturing cost assigned to Job 546.
c. During the year, the company worked a total of 145,700 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,283,246. What is the amount of underapplied or overapplied overhead for the year?
d. With reference to your answers to (c), if the underapplied/overapplied overhead amount were closed out entirely to Cost of Goods Sold, would net operating income increase or decrease? Explain your responses.
Question 2
Just Jeans uses the weighted-average method in its process costing system. The following data concern the operations of the company’s first processing department for a recent month:
| Work in process, beginning: | |
| Units in process | 300 |
| Percent complete with respect to materials | 60% |
| Percent complete with respect to conversion | 30% |
|
Costs in the beginning WIP inventory: |
|
| Materials cost | $342 |
| Conversion cost | $2,394 |
| Units started into production during the month | 21,000 |
| Units completed and transferred out | 20,700 |
| Costs added to production during the month: | |
| Materials cost | $44,136 |
| Conversion cost | $546,750 |
| Work in process, ending: | |
| Units in process | 600 |
| Percent complete with respect to materials | 80% |
| Percent complete with respect to conversion | 30% |
Required (show your calculations):
a. Determine the equivalent units of production for the month.
b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory
d. Determine the cost of transferred out units.
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